Lawmakers' revenue plan would hike gas, tobacco taxes

By Allison Thomasseau, Statehouse Correspondent

Updated:
04/03/2013 09:10:39 AM EDT

After weeks of discussion, the Legislature's leadership released its own plan for fixing Massachusetts' transportation system -- a $500 million package of tax increases on gasoline and tobacco that falls far short of Gov. Deval Patrick's call for $1.9 billion in tax increases for transportation and education.

"We need to invest, but we need to invest in a way that doesn't bankrupt the current generation," Senate President Therese Murray, D-Plymouth, said at a Statehouse press conference Tuesday.

The plan, put together by Murray, House Speaker Robert DeLeo and their budget committee chairs, would raise the current gasoline tax of 21 cents by 3 cents per gallon and boost the tobacco tax $1 per pack to $3.51.

The proposal also allocates vehicle sales-tax revenue to transportation projects, allows taxes on software and computer-system design, and changes how utility taxes are classified, allowing the state to collect more corporate taxes.

House and Senate leaders said the cigarette tax would raise $165 million in new revenue. Taxes on computer software would raise $161 million. The gas tax, which would be tied to inflation, would raise $110 million, with the average driver paying $12 to $15 more each year at the pump.

Senate Ways and Means Chair Stephen Brewer, D-Barre, said the gas-tax increase "makes sense," but cautioned against using it as a major source of revenue.

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"If we rely on the gas tax too much, it would set the stage for a transportation crisis in the years to come," Brewer said.

The House and Senate's $500 million revenue plan would allow for $200 million in infrastructure investment and expansion, although the proposal did not say which projects would receive funding.

The House and Senate plan is significantly less than the $1 billion in new transportation revenue Patrick proposed or the $800 million in transportation revenue that Michael Widmer, Massachusetts Taxpayers Foundation president, said the government would need to fix the state's transportation infrastructure.

Patrick's plan would also use additional revenues to increase education funding.

"This is more palatable to the public at large," DeLeo said.

Brewer said the legislative leadership adjusted the MBTA and MassDOT's estimated funding gap from $653.3 million to $265.1 million by removing spending assumptions under the governor's capital plan that called for expansion of MBTA's Green Line and a South Coast commuter rail.

The legislative plan would also phase transportation personnel costs into the operating budget.

Area legislators were divided on the plan.

Rep. Sheila Harrington, R-Groton, said in a phone interview that broad-based taxes, such as the gasoline tax, are not always equitable if they fund regional public transportation.

"The ridership should bear the cost of riding, not others," said Harrington, who favors a 10-cent increase in T fares over the gas and tobacco taxes.

Sen. Jamie Eldridge, D-Acton, said the proposed revenue was not enough to fix the state's transportation problems.

"This proposal did not meet what I'm advocating for," said Eldridge, who supports progressive taxes, such as the governor's proposed 1 percent income-tax increase from 5.5 percent to 6.5 percent.

The House and Senate proposal left the income-tax hike out, along with the proposed sales-tax reduction from 6.25 percent to 4.5 percent.

Rep. Marc Lombardo, R-Billerica, called the House and Senate plan "outrageous" and said the increased taxes were too high.

"The budget is already at $33 billion; how much more do we need to spend to accomplish the role of government?" Lombardo said in a phone interview. "We have priority issues, and we have a spending problem."

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